Rupee recovers from 1-1/2 month low as dollar slips

Rupee recovers from 1-1/2 month low as dollar slips

Mumbai: The rupee recovered from an early fall to 1-1/2-month low past Rs49 per dollar, helped by gains in the yen against other major currencies.

The partially convertible rupee ended at Rs48.91/92 per dollar, marginally stronger than its previous close of Rs48.93/94. It fell to Rs49.05 in early trade, its weakest since 13 July.

“The dollar’s weakness helped sentiment. The rupee’s rise allowed some importers to unwind long-dollar positions," said a senior trader with a foreign bank.

The yen rose broadly on Thursday, hitting its highest level in more than a month against the dollar and sterling as a slide in global stocks raised concerns a risk rally in past months may have been overdone.

The rupee had eased in early trade on dollar demand from refiners and other importers. Demand for dollars usually tends to be higher at month-end when importers make payments.

India imports nearly two-thirds of its oil needs, and refiners are the largest buyers of dollars in the local market.

“A positive close for the stock market also helped," the trader said.

Indian shares ended up 0.1% after the market rallied 6.5% over the previous five days.

Foreign fund inflows, which are influenced by the stock market’s performance, have been a decisive force in determining the rupee’s fortune over the last couple of years.

Foreign investors have bought $7.8 billion worth of shares so far in 2009, helping the rupee recover from a record low of 52.2 touched in early March.